Europe, Iran baffled by U.S. position on nuclear deal

Iranian Diplomacy | Mohammad Ghaderi and Javad Heiran-Nia: During his presidential campaign, Donald Trump called the Joint Comprehensive Plan of Action (JCPOA) “the worst deal ever” for the U.S.

In his first State of the Union address in January, Trump called on Congress to “fix the terrible flaws” of the Iran nuclear deal. The president has threatened to withdraw from the accord if Congress and Europe fail to amend it by May 12.

Since the Iranian Revolution of 1979, nothing has put Europe at loggerheads with the U.S. like the JCPOA. The fate of the deal seems to lie in the negotiations between Europe and the U.S.

Although European countries have pressured Washington to preserve the Iran deal, they agree with the U.S. over Iran’s missile program and its potential role in regional conflicts, and thus, they have formed a joint working group with Washington.

Richard Nephew, the lead sanctions expert for the U.S. team negotiating with Iran, said in an interview, “I do not think that Europe, much less Iran, will accept these conditions. I think that European officials would be pleased to have the kinds of measures agreed to by Iran, but the fact that Iran will not agree—and certainly not in this context—will mean that the Europeans will reject the attempt as prejudicial to the JCPOA.”

He also added, “I do not think that the EU will be able to meet Trump’s demands. He will either have to back down from his demands, which is possible but increasingly hard to believe, or there will be a confrontation.”

In the past three months, European states have gone to great lengths to convince the Trump administration and Congress that a stronger pact with Iran is not possible on the ruins of the existing JCPOA. To them, the deal is of high importance and its decertification would distract from focusing on Iran’s regional and missile program activities as well as its human rights issues.

In keeping the deal, Europe focuses more on its political and security implications than its economic benefits. Europeans are apprehensive that the decertification of the deal could lead to exacerbation of tensions in the region, unlimited enhancement of Iran’s nuclear program, and the credibility of multilateral agreements in the international arena.

At the same time, Europe feels threatened by Iran’s close ties with Russia and China and the possibility that, in response to Western pressure, Iran may establish firmer anti-Western allies. Europe has realized that only diplomacy and trust, not isolation, can help resolve issues with Tehran.

However, Europe also worries about damaging its extensive relations with the U.S. Nonetheless, Europe might be willing to accept the cost of angering Washington over the JCPOA if it means avoiding a situation in which Iran were to resume its nuclear program and the United States or Israel used military force to stop it.
Of course, Europe loathes having to choose between Tehran and Washington, and thus it will spare no efforts to avoid the choice. It might therefore opt for a middle road. Europe might try to please both parties of the deal by persuading Trump to retain the accord and Iran to limit missile ballistic programs and regional activities.

Iran’s Perspective

Iran hoped that the JCPOA would lead to the lifting of sanctions and opportunities for economic growth and normalization through foreign investments in the country’s various sectors. However, Trump’s wavering over the JCPOA certification every 90 days has scared off many international investors from Iran’s market.

According to an exclusive Crisis Group survey of more than 60 senior managers at multinational companies actively pursuing opportunities in Iran, the majority—83 percent—remain jittery about the prospect of the United States reimposing unilateral sanctions, and 79 percent have delayed plans to enter the Iranian market since the JCPOA came into force in 2016. Trump’s decertification of the nuclear deal in October, even though it had no immediate practical consequences, has adversely affected the future planning of nearly half of the companies polled.

Iran has repeatedly declared that the JCPOA is “non-negotiable.” It has also pointed out that the deal is not just between P5+1 but is rather backed by the international community and endorsed by the United Nations Security Council in Resolution 2231. Thus, decertification of the accord pits Trump against the UN and the world.

If Iran decides to withdraw from the deal, it would stand alone against the U.S. and Europe, an unattractive scenario that would send Iran back to square one.
If the U.S. were to withdraw from the JCPOA, Iran could choose to remain committed to its obligations with the remaining signatories of the deal, assuming that the other European states do the same. If the accord survived without the U.S., that would isolate Washington and open doors to Iran for the next round of cooperation with Europe.

Denis Chaibi, head of the Iranian taskforce at the EU’s external action service, has said that if the United States withdraws from a nuclear deal with Iran, the EU may reinstate former regulations to protect its companies that are trading with Iran. For instance, the EU instituted “blocking regulations” in 1996 as a countermeasure to the U.S. and its extraterritorial economic sanctions against Cuba and Iran. EU governments argued that sanctions benefited U.S. foreign policy interests at the expense of European sovereignty. The regulation still holds, but the EU hasn’t taken advantage of it on Iran.

Europe’s Double Game

The the European Union has a foot in both camps. For example, after Secretary of State Rex Tillerson’s visit to London and Paris in January, the EU and U.S. formed a special working group on Iran. According to Tillerson, the taskforce is responsible for addressing and correcting the flaws of the JCPOA.

However, just a few days after launch of the taskforce, France announced that it would push French companies to invest in Iran. Although it has been the loudest European critic of Iran’s regional activities and missile tests, France has also maintained strong economic ties with Iran since 1979. The plan offers special export guarantees for Iranian buyers of French goods and services in euros. The purpose of conducting financial operations in euros, and not dollars, is to minimize the effects of U.S. policies, which have discouraged financial institutions outside the U.S. to deal with Iran.

“We put a lot of preparation into this in 2017 and we keep on working, every single day, on the conditions of our entrance into Iran,” Bpifrance’s chief executive Nicolas Dufourcq has said. “This is a completely separate flow (of money),” he added. “There is no (U.S.) dollar in this scheme, no one holding a U.S. passport.”

The European stance plays a huge role in Iran’s final decision on the deal. Regardless of U.S. withdrawal and Europe’s support of the deal, Iran is focused on the benefits from the accord. If those benefits don’t materialize, it would be meaningless for Iran to keep its end of the bargain.